Andrew Grice: The day Brown nailed his colours to the Blairite mast

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The Independent Online

A much more dramatic cabinet reshuffle than expected gives Gordon Brown the final word of a fascinating party conference season. Already, David Cameron's impressive speech in Birmingham seems a long time ago.

Downing Street argued that the main purpose of yesterday's shake-up was to sharpen up the Government's response to the growing economic challenge. There was another important aim: to bind together a divided Labour Party whose self-inflicted wounds were all too open to public view. Peter Mandelson's surprise return to the Cabinet, and giving another Blairite, John Hutton, the job he wanted at the Ministry of Defence, is inclusive and locks in potential enemies. The prospect of a cabinet mutiny to force Mr Brown out recedes further into the distance. The global financial crisis has also bolstered Mr Brown's position, forcing rebels back into their box.

The "ditch Brown" moves may yet return, but probably not until after the European and local elections next June. By reshuffling his pack before MPs return from their summer break on Monday, Mr Brown hopes they will give peace a chance. The Prime Minister is showing that he will not be pushed out without a fight and is playing a clever hand in his Operation Survival. A Labour defeat at the Glenrothes by-election on 6 November now looks much less threatening.

For the normally risk-averse Prime Minister, recalling Mr Mandelson is high-risk. His many media enemies will be out to kill him for a third time, angry that the Prince of Darkness has somehow risen from the dead. Some Labour MPs and trade unions are spitting blood, knowing the business world will welcome him. It's a clear signal that Mr Brown won't use the crisis of capitalism to lurch to the left, as the Tories would love him to.

"We are all Brownites now," one Blairite MP chirped yesterday. For now, at least. Mr Brown hopes his changes will finally allow Labour to turn its fire on to the Tories. The Mandelson return is also an attempt to put the New Labour project together again. Mr Brown has been getting regular advice in recent months from two of its architects – Mr Mandelson and Alastair Campbell, Tony Blair's former director of communications.

Mr Brown rejected the advice of those who urged him to surround himself with soulmates, such as promoting Ed Balls to the Treasury. Instead, his changes were finely balanced. He has brought back his close ally Nick Brown as Chief Whip, a move that will not be welcomed by rebel backbenchers. But he has listened to his cabinet critics, bowing to their demand that he move his loyal but controversial spin-doctor Damian McBride out of the front line.

So who are the winners and losers from this year's conference season? After his reshuffle, Mr Brown comes out on top. But Mr Cameron was also a winner. The Tory conference could have been blown off course by the financial turmoil. There were, I'm told, wobbles behind the scenes. But Mr Cameron kept the show on the road.

He is not yet the finished article, and didn't always look comfortable answering questions on the economy in media interviews. Mr Cameron has not yet made the "hard choices" on policy that he warns his party it will have to swallow, keeping it sweet by mixing traditional tunes with modernising medicine. Yet he answered Mr Brown's "novice" charge, and looked a prime minister-in-waiting.

The conference season could easily have weakened Mr Brown's position. But a combination of the financial turmoil and his own actions leaves him strengthened. The big question now is whether or not the Cabinet rallies behind him or waits to see whether he sinks or swims.

Another winner was Ed Miliband, who made a very good speech and now steps out of the shadows to head an important new department for energy and climate change.

The biggest loser was probably his brother David. The Foreign Secretary's conference was not as disastrous as it was portrayed. His discomfort stemmed from his decision to run his leadership flag up the pole in July – perhaps in the expectation that cabinet critics would oust Mr Brown before the conference. This made it inevitable that all eyes would be on him in Manchester.

David Miliband doesn't look ready for the big prize yet. He may yet recover. However, some of his potential backers are having second thoughts. They are selling Miliband shares and buying those in James Purnell, the Work and Pensions Secretary. He has made clear he would not stand against Mr Miliband, but might come under pressure to do so, especially if Mr Brown leads Labour into the general election – a prospect that now looks more likely than it did.

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